Industrialization in the World

Lessons

Senior 6 · Geography

Industrialization in the World

4 lessons

Lesson 2 of 4

Factors Influencing the Location of Industry

25 min

A factory at the forest's edge

The Kitabi tea factory stands about 2 300 m above sea level in Nyamagabe District, on the edge of Nyungwe Forest, far from Kigali's workers, banks and shops. Yet Rwanda's main cement works is at Bugarama in Rusizi District, its new assembly plants cluster in the Kigali Special Economic Zone, and its bakeries are in every town. Each location is the answer to one question: where are total costs lowest, or profits highest? This lesson sets out the factors that decide the answer.

Definition

Industrial location: the place where an industry is set up, chosen to keep costs low or profits high.

Weight-losing industry: one whose raw materials are heavier than its product, such as tea, sugar, cement or copper smelting.

Weight-gaining industry: one whose product is heavier or bulkier than its localised raw materials, usually because it adds water, such as soft drinks and beer.

Localised raw material: one found only in certain places (iron ore, tea leaf). Ubiquitous raw material: one found almost everywhere (water, air, sand).

Material index (MI): $MI = \frac{\text{weight of localised raw materials}}{\text{weight of finished product}}$ . If $M I > 1$ , the industry is pulled to its raw materials; if $M I < 1$ , to its market.

Agglomeration economies: savings firms gain by locating close together: shared services, suppliers, skilled workers and ideas.

Industrial inertia: the survival of an industry in a place after the original reasons for its location have gone.

The main factors

Factor	How it influences location	Example
Raw materials	Weight-losing, bulky or perishable materials pull industries towards them	Tea factories beside estates (leaf wilts within hours); cement at Bugarama beside limestone; sugar mills in cane fields
Power	Industries using enormous energy locate near cheap power	Aluminium smelting at Nag Hammadi in Egypt, using power from the Aswan High Dam; early steelworks on coalfields such as the Ruhr
Market	Weight-gaining, fragile or perishable products, and services, locate near buyers	Soft-drink bottling, bread, furniture; most factories near big cities
Transport	Firms choose sites with cheap, fast links; ports and junctions are break-of-bulk points where goods change from one mode to another	Coastal steelworks in Japan using imported ore; industries along the Mombasa–Kampala–Kigali corridor
Labour	Cheap labour attracts labour-intensive industries; skilled labour attracts high-technology ones	Garment factories in Bangladesh; software and electronics in Silicon Valley, California
Capital	Banks, investors and foreign direct investment concentrate in large cities	Headquarters and finance in New York, Shanghai and Kigali
Land	Large, flat, cheap sites with room to expand	Industrial parks on city edges; Kigali Special Economic Zone
Water	Needed for cooling, washing and processing	Breweries, paper mills, steelworks and coffee washing stations beside rivers or lakes
Government policy	Tax holidays, special economic zones, ready-built factories, or bans in crowded areas	China's Special Economic Zones from 1980; Rwanda's "Made in Rwanda" policy and its economic zones
Agglomeration and linkages	Firms cluster to share suppliers, customers and skills	Car-parts makers around car plants; Silicon Valley
Political stability and security	Investors prefer peaceful, well-governed places	Rwanda's emphasis on security and ease of doing business
Industrial inertia	Firms stay because moving is costly and skills and links exist	Steel and cutlery in Sheffield after local ore ran out

Weber's least-cost theory

The German economist Alfred Weber (1909) argued that a factory locates where its transport costs are lowest, then adjusts for labour costs and agglomeration. He imagined a triangle (Figure 1): two sources of raw materials and one market. The factory is pulled towards each corner in proportion to the weight that must be carried from it. When one raw material is very heavy and loses weight in processing, the factory is pulled right to it; when the product gains weight, the factory is pulled to the market.

Figure 1: Weber's locational triangle. The pull is strongest towards the corner from which the most weight would have to be carried.

Limits of the theory. Weber assumed one market, fixed sources, transport costs that rise evenly with distance, and firms that aim only at the lowest cost. In reality, transport costs taper with distance, governments offer incentives, firms seek profit and safety, and many modern products are so light that transport hardly matters: they are footloose.

Worked example 1: where should a tea factory go?

Problem. It takes 4.5 t of green leaf to make 1 t of tea. An estate and a market town are 100 km apart, and transport costs an illustrative 200 Frw per tonne per km. Ignoring other inputs, compare the transport cost of making 1 t of tea at the estate, halfway, and at the town. Calculate the material index.

Solution. Leaf travels from the estate to the factory; tea travels from the factory to the town.

\text{At the estate: } 1 \times 100 \times 200 = 20\,000\ \text{Frw}

\text{Halfway: } 4.5 \times 50 \times 200 + 1 \times 50 \times 200 = 45\,000 + 10\,000 = 55\,000\ \text{Frw}

\text{At the town: } 4.5 \times 100 \times 200 = 90\,000\ \text{Frw}

MI = \frac{4.5}{1} = 4.5 > 1

The estate is cheapest, and the leaf would also spoil on a long journey. Both facts explain why Rwanda's tea factories stand among the tea gardens.

Worked example 2: why bottling plants are near cities

Problem. An illustrative soft-drink plant makes 1 t of bottled drink from 0.12 t of sugar and concentrate (localised) plus water (ubiquitous, available wherever the plant is built). The sugar comes from a factory 100 km from the city where the drink is sold. With the same transport rate of 200 Frw per tonne per km, compare the cost of locating at the sugar factory and in the city.

Solution.

MI = \frac{0.12}{1} = 0.12 < 1

\text{At the sugar factory: carry 1 t of drink: } 1 \times 100 \times 200 = 20\,000\ \text{Frw}

\text{In the city: carry 0.12 t of sugar: } 0.12 \times 100 \times 200 = 2\,400\ \text{Frw}

Locating in the city costs about one eighth as much in transport, because the plant adds local water. Weight-gaining industries are market-oriented.

Warning

Common mistakes. (1) Listing factors without examples: always name a place and an industry. (2) Forgetting that factors change: steelworks moved from coalfields to coasts when ore and coal began to arrive by sea. (3) Applying Weber to footloose industries: a software firm's "product" weighs nothing, so labour, skills, internet and policy matter far more than transport.

Tip

Exam technique. For "account for the location of industry X in place Y", sort your answer into physical factors (raw materials, power, water, land) and human factors (market, labour, capital, transport, policy, agglomeration, inertia), and finish by saying which factor was decisive and why.

Mr Elrod, AP Human Geography: "Weber's Least Cost Theory of Industrial Location". Watch for how weight-losing and weight-gaining industries are pulled in different directions, and note the labour and agglomeration factors that modify the transport-cost site.

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Practice

Distinguish between weight-losing and weight-gaining industries, giving an example of each.
Explain why aluminium smelters are often located near hydroelectric power stations.
Making 1 t of cement needs about 1.6 t of limestone and clay. Calculate the material index and state where the industry is likely to locate.
Explain two ways in which government policy can influence industrial location.
Using Worked example 1, calculate the transport cost if the tea factory were built 25 km from the estate, on the road to the town.
Explain why bakeries are found in every town but steelworks in only a few places.
Evaluate the usefulness of Weber's least-cost theory for explaining the location of industry today.

Show answersHide answers

Weight-losing: the raw materials weigh more than the product, so the industry locates near them (sugar, tea, copper smelting). Weight-gaining: the product weighs more than the localised raw materials, usually by adding water, so it locates near the market (soft drinks, beer).
Smelting aluminium uses enormous amounts of electricity, which is a large part of its cost, so firms seek cheap, plentiful power such as Aswan for Nag Hammadi in Egypt.
MI = 1.6 ÷ 1 = 1.6 > 1, so cement works locate near limestone quarries, as at Bugarama.
For example: tax holidays and ready-built sites in special economic zones attract firms; bans or high taxes in crowded areas push them elsewhere; state-owned firms may be placed to develop poorer regions.
Leaf: 4.5 × 25 × 200 = 22 500 Frw; tea: 1 × 75 × 200 = 15 000 Frw; total 37 500 Frw (still more than 20 000 Frw at the estate).
Bread is perishable, made from widely available inputs and sold to everyone, so bakeries are market-oriented and spread out. Steelworks need huge capital, heavy raw materials, much power and big markets, so they concentrate in a few sites near ore, coal, ports or large markets.
Useful for heavy, weight-losing industries where transport costs dominate (tea, cement, smelting) and for explaining market-oriented bottling. Less useful today because transport costs have fallen, many goods are light and footloose, governments give incentives, firms seek profit rather than only least cost, and labour, skills and agglomeration often matter more.

Summary

Industries locate where costs are lowest or profits highest; key factors are raw materials, power, market, transport, labour, capital, land, water, government policy, agglomeration, stability and inertia.
The material index tells whether an industry is pulled to raw materials ( $M I > 1$ ) or the market ( $M I < 1$ ).
Weber's least-cost theory explains heavy, weight-losing industries well but not footloose modern industries.

Sources and credits

Location theory and Alfred Weber: Wikipedia contributors, CC BY-SA 4.0, adapted by Ganzaa.

Photo: Kitabi Tea Factory (KingVik Planet, CC BY-SA 4.0), via Wikimedia Commons.

Video: "AP Human Geography - Weber's Least Cost Theory of Industrial Location", Mr Elrod, embedded from YouTube.

Figure 1, the worked examples and exercises: written by Ganzaa.

This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.

1A factory at the forest's edge

2The main factors

3Weber's least-cost theory

A factory at the forest's edge

The main factors

Weber's least-cost theory